Property – PropertyESP

700 is the magic number (Part 2)

Following on from our previous post re Colin Keane’s land report, we will now explore what is happening across Perth’s corridors.

At present there are 165 active estates in Perth achieving an average of 3 sales per month. At our peak in the mining boom this rate was 8 sales per estate. We are currently selling at 17% capacity and again at our peak we performed at 60% capacity. And we will need to see 1300 sales/month before we will see prices improve (which is double the 700 that Colin Keane is suggesting we should be aiming for).

The North East corridor is the best performing sub market with 25% of all activity across Perth. There is currently 129 lots sold per month but it ideally should be selling 175 lots and as such is 26% below capacity. At present, capacity is in line with target and hence when the market returns to normal, this will be the first sub market to perform well.

North West Perth represents 20% of the market share and this is linked to its proximity to the coast. Its monthly target is 140 sales and this corridor is currently achieving 89 sales pcm. On this basis this corridor is performing 36% below target. However unlike the North East, this market is 159% oversupplied.

South West (Baldivis) also represents 25% of the market share. With 120 sales pcm and a target of 175 sales/month this corridor is performing 31% below target. This area however is the worst oversupplied with 302% excess capacity (currently 1257 lots on the market).

The South East sector also represents 25% of the market share and 102 sales pcm and a target of 175 sales per month. Performing 42% below capacity, this market is also reflecting 242% excess capacity with 625 lots on the market. This area is also overvalued by $7000 on land prices.

And finally Peel represents 5% of the market share with 21 sales pcm and a target of 35 sales per month. Performing 40% below capacity, this area has 324 lots on the market and hence representing 463% excess capacity. Land in this corridor is also $20,000 overpriced.

It is quite evident that if we can attract the 1000 people per month than this will have a significant influence on the health of our land sales and this is now our crucial focus.

While Colin stated we didn’t have to worry about overseas net migration, what we do need to do is cut our interstate migration by 50% (from 3000 people moving to the East to 1500) and this would have the desired effect we need.

But until we reach that target of 1000 people per month, the Perth land market will continue to face challenges and more so in the South West and Peel regions. If you hold land in these areas, then you need to be considering innovative marketing strategies to stand out from the competition. The good news is that PropertyESP is renowned for our marketing prowess, so contact Sam today on 0452 067 117 and we will troubleshoot your sales!

700 is the magic number for Perth

A recent presentation by land guru Colin Keane, has shown that Perth could achieve optimal sales with just a few tweaks to market conditions.

There is no doubt that population growth is a major key to changing the dynamics of the Perth land market and as Colin stated, all we need is 1000 additional people per month in our state to allow us to achieve the optimal target of 700 land sales per month. And the good news is, we are already on our way, with Perth the only state to have grown nationally from overseas migration in the last 12 months with 16% uptake.

Currently selling 420 lots per month, Perth’s median price point of $224,000 is certainly the cheapest when you consider our other cities including Sydney ($468,000), Melbourne ($330,000) and South East QLD ($263,000). It is also interesting to note that Perth’s land prices are undervalued by approximately $6000 while Sydney is overpriced by $70,000 and Melbourne $42,000.

However when also considering Perth in contrast to our counterparts and our median lot size, we appear to be the smallest nationally with our median size 375sqm in contrast to Melbourne (400sqm), Sydney (447sqm) and SEQLD (436sqm). And it is this sameness that is also depressing our market to a certain extent. Variety after all is the spice of life!

For every 100 people employed in Perth we are assured 45 land sales and again this contrasts starkly to the East with the ratio in NSW 14:100 and Victoria 24:100. However as Colin stated, if you consider Geelong which is the 2^nd largest land market in the nation, the majority of its land sales growth has not necessarily come from employment, with this centre also reflecting an unemployment rate which is 18% above the state.

As Colin stated, of the extra 1000 people per month in WA, we only need 40% employed and the remaining 60% just need to choose Perth as their preferred home. And with WA creating employment growth 30% above the forecast, all we need to do is become experts in tourism marketing!

As we see it at PropertyESP, Perth needs to start promoting our good news about mining investment ($64 billion committed), our affordable pricing and our great lifestyle and the rest will take care of itself!

We can certainly be the creators of our own destiny and this is very reassuring – because with a concerted effort we can achieve the magical number of 700 land sales per month!

If you like the proactive way that PropertyESP thinks – then you should chat to our team about how we can catalyst your sales with our marketing prowess. Call Sam on 0452 067 117 for an insightful chat!

Women are taking over the world (did you get the memo?)

After a number of recent events including International Womens’ Day, PropertyESP Director Samantha Reece thought she would share some insights into how women are forging ahead with property ownership.

“Westpac’s annual Home Ownership Report recently revealed that women are overtaking men when it comes to home ownership.

A survey of more than 1,000 Australian home owners and first-home buyers found that women are ahead of men in most categories:

more women have bought a home to live in (women 28 per cent of survey respondents compared with men 20 per cent)
more women have bought an investment property (16 per cent compared with men 13 per cent)
more women are renovating (29 per cent compared with men 27 per cent)
and more women are selling a property (17 per cent compared with men 14 per cent).

The report also found that more women than men ‘strongly believe’ that ‘owning your own home is a reflection of your success in life’ (up 26 per cent on last year) and that ‘property is a pathway to wealth’ (up 10 per cent on last year).

Female first-home buyers were twice as likely as men to consider good investment potential in a home as essential (35 per cent vs men 18 per cent), and were also twice as likely to consider buying an investment property in the next five years (22 per cent vs men 11 per cent).

Overall, 71 per cent of women are ‘considering housing actions in the next five years’, as opposed to 61 per cent of men.

And data from the ATO shows the number of female taxpayers receiving rent has risen from just under 14 per cent in 2010-11 to 15.4 per cent in 2014-15. By comparison, over that period men only saw an increase from 14.7 per cent to 15.9 per cent. The ATO data also indicates that approximately 47 per cent of all investment properties are owned by women.

With an increase of 3000 females in the workforce in WA over the last quarter, it is evident that women are securing greater financial independence and hence making their own business decisions when it comes to property. This is also affected by the fact that the average age of a woman who marries in WA is now 29 and the State recorded the highest proportion of divorces nationally at 48.3% in the 2016 census.

But more close to home, PropertyESP recently conducted research with buyers of the Stockland Completed Homes and found that women had a huge influence over the final purchase. While the husbands took their wives to other houses that were cheaper and bigger – it was futile – because when these women inspected the Completed Homes, it was literally love at first sight! There were also cases where the women sourced additional income from lenders and family in order to stretch their budgets and buy what they wanted!

These trends will ultimately have an influence over how a company markets and sells their properties – especially on a face to face level in the sales office.

The question is – are you ready for this new wave?”

WA has every reason to be feeling confident

Samantha Reece, PropertyESP Director recently spoke at the Perth Property Expo about why the West was the best investment option nationwide.

In preparation for her dialogue, Samantha undertook her usual research and found some very interesting facts:

In the 2016/17 year iron ore revenue from WA increased by 31% to $67.3 billion
In the same period gold broke the 200 mark, which hasn’t occurred since 2000/2001 – selling 205 tonnes
Tourism grew by 1.3%
Building approvals increased by 27% from just August to September 2017
Unemployment rate fell to 5.7% on par with the nations average
Consumer confidence has reached an all-time three year high
And 30% of the population believed that the economy would strengthen in the next year while 41% believed it would stay the same

This coupled with the avalanche of new infrastructure, about to descend upon Perth including:

$65 million Yagan Square
$400 million redevelopment of QV1, Forrest Chase and Raine Square
$1.6 billion Perth stadium
$500 million Canning City Centre and Carousel expansion
$2.65 billion Metronet
$200 million Murdoch medical precinct
$235 million Canning Hwy/Bridge redevelopment

And there is no doubt that that Perth is about to transform from a City, into a cosmopolitan capital.

Certainly in ten years Perth will be entirely different City and its evolution will create more opportunity and diversity.

We however, need to be aware of just how much WA has got going in its favour – and while it can not compare to the 2011 boom time – it is certainly showing signs that are extremely positive – and it is this good news, that we should be celebrating publicly! Spread the word!

Night time economy part of WA’s future

With all the inner city development occurring, a colleague of PropertyESP recently attended the Australian Night Time Economy (NTE) conference in Melbourne.

This conference dealt with the fact that the night time economy, which for so long has been associated with bars, restaurants and adult entertainment in fact was evolving and in the UK this economy represented $66 billion in trade alone (or 6% of GDP).

Closer to home, Brisbane’s NTE grew by 25.2% from 2009-2014 from $4.97 billion to $6.231 billion.

With changing work habits, multicultural diversity and in fact a 24 hour global clock, we are less and less inclined to think that night time is just for hedonistic activities.

But this means that if we want to transform some of our City into true night time economies we need to think across planning, place making and regulation.

This means that we need to consider pop up markets in car parks. And temporary installations. And be more liberal with parklets.

This also means that we need to entwine our fashion, food and entertainment outlets and more so be open for custom.

That means that sometimes we have to take a risk and in fact subsidise these concepts to allow for creativity and sense of destination.

With so many areas undergoing rejuvenation in Perth at present – this is the perfect breeding ground for innovative night time solutions.

The question is – are we going to seize this opportunity?

The team at PropertyESP dare you too! The time is certainly ripe for disruption!

Perth land prices most affordable nationwide – but lack of variety is our downfall

Samantha Reece, Director of PropertyESP recently attended the UDIA lunch with Colin Keane of Research 4 and then participated with the panel discussion alongside David Cresp (Urbis) and Gavin Hegney.

Certainly Colin’s presentation was somewhat telling of Perth’s current status for land sales.

While Perth peaked in 2013 with 1078 lot sales per calendar month. In 2016 our underlying demand for land is now 637 lots per calendar month and actual sales are 478.

However there are a number of reasons why we are having this reduced success rate – and it is primarily to do with population.

First of all, Perth’s demand for land is driven predominantly by employment. For every 100 people employed there is the direct correlation of 38 lot sales. This ratio in Sydney is 17 lots to every 100 people and in Melbourne 26 lots.

To broaden our market we therefore need to consider a number of options – including net migration with emphasis on education, temporary work visas and holiday visas.

Nationally 56% of land sales are non-local demand. In Perth it is 16%. This means that 84% of our land purchasers are based locally.

Perth therefore needs to emphasise our market and attractive lifestyle in order to trigger interstate and foreign investors and certainly consideration needs to be given to delaying the State Government’s foreign buyer’s tax, as this could further reduce demand.

Tourism is also a key player with our land sales growth.

Nationally 50% of short term visas are for holidays – in WA our rate is 11%. As Colin stated we need to grow our portfolio of tourism experiences and hence concepts such as gondolas connecting Elizabeth Quay and Kings Park no longer seem so farfetched.

Perth has well recognised tourism sites such as Rottnest Island, Kings Park, Elizabeth Quay and Swan Valley. But now what we need to do is make these experiences deeper and more impressive so as to drive tourism spend to our state in preference to others.

Immigration also catalysts further population growth and so attracting students to WA for education purposes will undoubtedly attract their families. The same can be said for immigration as a whole.

But there were two final gems of knowledge.

Firstly that WA has the cheapest land in the nation at an average price of $225,000 compared to Melbourne $272,000 and Sydney $423,000.

But while this is positive news, it is our stagnation in the small block sizes ie 450sqm that is killing the market and hence we also need variety of lot sizes to cater to all demographics.

And secondly, WA needs variety across a number of realms – our economic basis, our population and our supply of housing options.

Undoubtedly WA needs to grow its global handshake.

While Government has reduced the FHOG and other such stimulants, what its core focus should now be, is to attract and then retain people.

As such, while the Government may be initially focused on servicing WA in regards to Metronet etc, its top priority should be to work with private enterprise, on ways to boost WA and its profile.

Major events, stimulating tourism sites and golden education opportunities are the ingredients that will return WA to a stronger population market – and one that will help the economy overall.

Perth is experiencing a period of disruption – and that is going to definitely also going to affect the land sector. The question is – are you prepared?

Perth’s housing supply falls short

The question on everyone’s lips of late has been “Are we being oversupplied with apartments?” but recent research from the Australian Housing and Urban Research Institute (AHURI) and the Bankwest Curtin Economics Centre (BCEC), has shown that in fact increases in housing stock in Perth have failed to match population growth.

The study – Housing supply responsiveness in Australia: distribution, drivers and institutional settings, led by Professor Rachel Ong, Deputy Director of BCEC, examines how well supply is keeping up with demand across Australia’s regions and capital cities.

And while the rest of Australia has been able to match demand – Perth has lagged behind.

The report also found that most of Perth’s housing was concentrated in the mid to high price segments.

While typically construction of housing at the top end of the price scale tends to then allow for an increase in availability of affordable housing – this has not been evident in Perth.

It therefore appears that Perth is in fact in dire need of more apartments – but in the right locations.

The recent WA Apartment Advocacy research showed that renters were seeking locations that were close to their work as well as conveniences such as public transport, shops, gyms and restaurants. And while the Metronet will free up many opportunities for affordable housing along the train line – this also needs to be matched with services and facilities.

The fact is, we need more housing and we need affordable options and that is going to require creative thinking outside of the box. But either way – urgent action is needed!

Read more about this article and PropertyESP’s Samantha Reece’s comments in this weekend’s edition of the West Australian.

Would you invest $100 into WA’s future?

So at PropertyESP we are big fans of infrastructure and especially have been advocating that Metronet becomes a key priority with the newly elected Labor Government.

However contrary to our views, a number of developers have been reticent to endorse Metronet as they believe the development sector will be the ones forced to contribute with the value capture model.

Always focused on solutions, Samantha Reece Director of PropertyESP invited John Del Dosso from Colliers to present at the Property Council Residential Committee about other options that were also available to fast track Metronet.

John advised the Committee that if the Government was to charge a $100 levy/household per year they would raise $72 million. If that same levy was placed on commercial businesses then this would add another $72 million per annum. If you were to consider this as a perpetuating levy than in 5 years the Government would have raised over $600 million.

This is the exact model that Jeff Kennett applied in Victoria and as a result leap frogged that state into a growth phase (http://www.theage.com.au/victoria/regrets-only-a-few-20120928-26qme.html).

John went on further to recommend that a toll be placed on the Northern Freeway – which at the moment is one of the fastest growing corridors. His reasoning was that the businesses travelling to work in this locale would be the ones paying the toll and residents – wishing to avoid this fee – would be more likely to catch the train (which would mean that this transport system may in fact become sustainable).

Samantha thought that this was a brilliant concept – despite being somewhat radical.

But when she raised it with other colleagues, their first reaction was to state that they didn’t think they should be forced to donate $100 so that Ellenbrook could get the train.

This led Samantha to think – just when would we as ratepayers, start to believe and hence invest in our own state?

This “What’s in it for me” mentality is in fact preventing us as a State to bloom – but at the end of the day $2/ week is very little to give up, in order to gain so much.

Perth is definitely in a precarious position – destined to grow with the most recent infrastructure which has been created – but also facing potential failure if our mindset is not right.

What do you think – would you invest $100 a year to help Perth’s transport network grow?

PS the good news is that Mark McGowan announced the Federal financing commitment for Metronet in today’s press (http://www.perthnow.com.au/news/western-australia/23-billion-jobs-boost-for-wa/news-story/b53b044c6aa3848a4c809169a1ea7645)

Coastal living the new black

Despite the resistance by coastal suburbs to welcome apartment living into their community – the research from the WA Apartment Advocacy has clearly shown that this status is going to have to change – and soon.

Of the 155 apartment owner occupiers surveyed, 15% had been living in a coastal location before then moving into their apartment (19% living on the coast). However when asked where they would choose to live next time – 70% stated an apartment and 49% stated a coastal location. 44% also indicated they would choose riverside. This was evenly dispersed across all age groups.

Of the 113 renters interviewed, 11% had been living on the coast and 14% moved into a coastal apartment. But when asked where they would choose to live next 73% stated an apartment and 47% demonstrated a preference to coastal locations.

Of those living in the inner city – the owner occupiers showed a movement away from this address with a drop of 61% to 50% as this being their preferred location.

With Perth’s apartment market still very young, and limited supply in restricted locations, Perth apartment livers have chosen the best from what is on offer.

But ultimately what they want is access to the coast – which up until now has only been available to the privileged.

Councils that have therefore chosen to listen to the 5% of their population who reject apartment living have quite obviously chosen to ignore the majority who want this choice (and rightly so) for their home.

It is a message that Councils and Government will now need to start listening to.

At PropertyESP we are glad for this intelligence which raises the argument for permitting apartment living in key locations such as Trigg, Scarborough, Cottesloe and so forth. Because without it – all we hear are the nay sayers. But now there is a larger voice speaking up – and they are saying yay for choice!

Robust discussion needed for infill

Samantha Reece of PropertyESP recently attended the South Perth planning workshops which dealt with the proposed train station precinct and its overall design.

Now in an earlier career path, Samantha was Director of SMR and responsible for a number of community consultation projects including the Gidgegannup town centre. But what was interesting for Samantha in this case, was that the sessions were hosted by a Council and not the developer and hence this allowed for a sharing of a range of views and hence some much needed robust discussion.

Now when the South Perth Town Planning Scheme was passed in 2013 this was done so without discussing height – but rather based on the provision of a train station. A very dangerous move because it did not deal with the elephant in the room!

As a result, when development started in 2016 and residents were faced with 39 stories – not only did they take proactive action to stop this occurring – but the train station became a dirty word (literally).

To the credit of the Council they have decided (after many inconclusive months) to now take charge by listening to all parties.

As such Samantha was delighted to see that some of the “anti development” factions were really challenged on their assumptions while developers also had a chance to revise the mandatory plot ratio for the commercial vs residential (which at present is making a number of projects in the area nonviable).

While the planning sessions were to a certain extent very much “wish list” orientated – they did allow a forum for developers and supporters of high rise, to challenge and dismiss some of the hype that the anti development factions had created. And no doubt by allowing for this robust and sometimes very aggressive debate, the “nay sayers” were shown to be just a marginal party in the overall context.

PropertyESP wishes to congratulate the South Perth Council because they could have taken action that would have hindered their community’s growth – and yet they took the bold move to in fact challenge people’s paradigms and hence allow for the stretching of minds and concepts. Plus they did deal with the elephant – and talked height!

At the end of the day – any decision will upset some parties – but it is the deep seated understanding that you look after a whole community (and not just the vocal minority) which the South Perth Council has heeded! As such they have set an example for others that also need to take this bold and proactive approach. Change will not happen by chance – but rather through leadership!